Author: Jeffrey MacKie-Mason

There is a deep, very troubling and dangerous flaw in putting “both sides” of the Charlottesville protests on the same plane. Doing so commits the logical fallacy known as “tu quoque” (Latin for “you also”), conventionally called “whataboutism”. This is a common, simple error that can lead to wrong conclusions. An error that quickly became the center of a national debate after the Charlottesville protests, about the moral equivalency of the far right protesters and the opposition counter protesters.

The fact that so many are making this error — apparently including the U.S. president, though I find his statements sufficiently incoherent and self-contradictory that I really can’t tell what he believes — goes to the heart of why it is so important for educated citizens to learn the skill of critical thinking, which is the foundation of the liberal arts university education that was invented in the U.S. in the mid-1800s. [1]

First, let me say that I abhor violence, and that I am not going to claim that violence by one set of protesters was more justified than by the other set. For the purpose of this piece, let’s just set aside the violence — either agreeing that anyone who engaged in violence during the lawful, civil protest that day is wrong and should be punished, or if you don’t agree with that, then simply leaving the discussion of violence for another day. Those who perpetrated violence were in the minority, in any case, so we can focus on everyone else present.

What concerns me is that so many are arguing that the purpose and legitimacy and moral standing of the two groups of protesters is somehow equivalent. This is a serious error, the type that critical thinking helps us avoid.

Yes: the far right protesters have the same right to free speech as do any others, and their march and the non-violent part of their protest, in a public place, was lawful. Absolutely. Part of our very special democracy is that, as our Supreme Court stated in Matal v. Tam just this past June, “the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate.’” And the counterprotesters have the same right to express (in speech — not violence) their hatred of that speech.

But the fact that “both sides” had the right to speak does not make them morally equivalent on that day — or any day. The far right protesters organized and gathered to advocate for things that are morally repugnant, and unconstitutional. They called on well-known symbols of the Nazi party to attract participants, such as posters that mimicked Nazi propaganda posters. (Here’s an article posted by Fox News — generally viewed as conservative — making this point: http://fxn.ws/2igNWg9.) At the protest, many wore Nazi paraphernalia, carried flags with swastikas, and wore shirts quoting Adolf Hitler — and all were marching alongside Nazi flags. One of the oft-repeated chants during the march was “Jews will not replace us.” Another was the core slogan of the German Nazi party, “Blood and Soil!”. They were advocating for white supremacy, racism and anti-semitism: hatred of human beings because of their skin color or their religious beliefs. One of their leaders present, Richard Spencer, has called for ethnic cleansing in America http://bit.ly/2ihciXl). They want to oppress other humans, and deny them the rights they are guaranteed by our constitution.

The counterprotesters had a very different purpose: to oppose racist and anti-semitic views, to oppose oppression. They are working against bigotry and denial of basic, constitutional human and civil rights.

“Both sides” are not morally equivalent. One advocates hate-mongering, oppression, denial of constitutional rights and ethnic cleansing. The other opposes these goals.

What does this have to do with critical thinking and education? Those claiming moral equivalence between the racist neo-Nazis and the protestors against bigotry are using whataboutism, one of the Soviet Union’s (and now Russia’s) favorite propaganda techniques: picking out some aspect of the behavior that is similar across the two groups, and claiming that makes them morally equivalent. [2] But that’s silly, uneducated and dangerous. You need to compare them on all the criteria that matter.

For example, the defenders of the far right protesters say “both sides” were there to exercise their First Amendment rights to express their views. Yes, and they have the right to express those views. But exercising your rights does not make you a fine person. Legally expressing racist, anti-semitic, oppressive views in our society — founded on the principle that all persons are created equal — does not make you morally equivalent to someone who opposes such views.

One of the great contributions of university education to a civil society is its commitment to developing critical thinking skills in our students. We need citizens who consider all sides to an argument, rely on verifiable facts, and use sound logic. Whataboutism fails this test.

University libraries are playing an increasingly important role in information literacy education: helping our students learn now to find relevant information, critically evaluate its reliability and quality, and use it to reason soundly. I’m proud to be part of a centuries old institution that is dedicated to thinking carefully about the hard questions facing us, so that we avoid the superficial but very dangerous errors that can lead people to think that hate-mongering racists and anti-semites are no worse than those who protest their hate.

(Thanks to Tiffany Grandstaff for her editorial wisdom.)

Footnotes

[1] There are two words in that sentence — critical, and liberal — which in common usage have different meanings that when they are used in the phrases “critical thinking” and “liberal education”. Let me be very clear so that — hopefully — the use of these concepts does not generate unwarranted political opprobrium. “Critical thinking” does not mean “negatively critiquing” or being opposed to the views of another. Critical thinking is the disciplined process of actively analyzing and evaluating information to determine its reliability and meaning, then reasoning soundly to reach a conclusion. It might as well be called “good thinking”: considering all sides to an argument, relying on verifiable facts, and using sound logic. “Liberal education” is not a political term: it doesn’t have anything to do with the liberal-conservative spectrum in politics. Rather, using the definition of the Association of American Colleges and Universities, it is “an approach to learning that empowers individuals and prepares them to deal with complexity, diversity, and change. It provides students with broad knowledge of the wider world (e.g. science, culture, and society) as well as in-depth study in a specific area of interest.” Source: https://www.aacu.org/leap/what-is-a-liberal-education.

[2] That there are human rights abuses in the U.S., does not absolve a regime that built the gulags — forced labor concentration camps for millions of its citizens.

My colleague Ginny Steel, UCLA University Librarian, published an “open letter” on 19 October 2016 opposing proposals to “flip” scholarly publishing from post-payment (subscription, or paywall) funding to pre-payment (article processing charge, or APC) funding, as advocated by, for example, the OA2020 initiative. While I admire UCLA’s commitment to advancing open access and affordability of scholarly publishing (which are two separate questions, though often entwined), I disagree with almost all of her arguments against pre-payment (“flipping”). They are based largely on unsubstantiated fears, fears that will remain unsubstantiated because they are a result of fundamental flaws in economic logic.[1]

The basic argument is rather simple. Changing the funding model from post-payment to pre-payment does not increase the costs of production journal publications, thus publishers will not have higher costs that they “need” to recover. And changing the funding model from post-payment to pre-payment does not increase publisher market power, so they will not be able to collect more money from research institutions than they already collect.

In fact, the most likely outcome is that publishers will be forced to compete economically for article submissions, and this will lead to research institutions paying less to the publishing industry than it would in a continued world of post-payment (subscriptions).

Opposition such as Ginny’s – and she is far from the only person expressing these fears – makes me especially sad because they are expressed without any constructive, specific, coherent alternative for achieving the two goals: open access, and lower costs of scholarly communication.

Ginny offered many “concerns” about the economics of pre-payment publishing, before stating her opposition. Most of her arguments are variations on misunderstanding the same basic economic issues, but since each is stated as a separate concern, I respond to each. Block quotes below are all from her open letter.[2]

“Certain titles carry more prestige and have a higher impact factor, which allows them to set higher article processing charges. The model does nothing to resolve this disparity in pricing, nor to address the factors that drive authors to pursue publication in these journals, such as tenure and promotion processes. It remains an unknown, and possibly quite expensive, factor in determining what the model would actually cost.”

Yes, some titles carry more prestige, and objects in higher demand can charge higher prices (nothing special about publishing in that). But this is true of the very same publications when the price they charge is a subscription. Nothing about pre-payment (article processing charges, or APCs) rather than post-payment (subscriptions) increases their market power – that is, the economic opportunity to extract even more profit from us than they already.[3] Thus, changing from post-payment to pre-payment does not make this situation any worse.

In fact, pre-payment through APCs offers an economically sound path to decrease publisher market power and to reduce prices. The source of prestige – and market power – is copyrighted content. Subscription buyers (primarily academic libraries) have no control over the copyrighted content, and thus very little economic power in this market. However, authors do have control over their copyrighted content. Authors, if they have a direct economic stake in the outcome, are in the best – position to reduce publisher market power and slow the growth in prices.[4]

As I have explained elsewhere, open access through pre-payment does not require that authors pay APCs themselves – libraries can pay the APCs just as they now pay for subscriptions: publisher market power won’t increase and we will get OA for the same total cost that today we get paywall (subscription) publishing. That is a huge step forward, opposing OA through pre-payment because it won’t also solve the pricing problem doesn’t make sense.

Yet pre-payment also offers the opportunity to reduce publisher pricing power if we let authors have an economic role. I’ve explained that author payment of (some of) APCs does not require that authors use their current scarce funds – we can provide (some or all of) the funds library currently pay for subscriptions to authors to spend instead on (some or all of) APCs, but let the authors – who control copyright, the source of economic power in publishing – choose between comparably prestigious but differently priced journals when submitting their articles.

“Given that their perceived status (or careers; see previous point) depend on it, authors will continue to be driven more by journals’ prestige than by the relative affordability of article processing charges.”

This argument is based on a common fallacy. Almost never is there just one standout journal for a given article submission. Thus, prestige generally is not the only thing on which submission decisions are based. (Other factors include those that affect acceptance likelihood – such as fit to the editorial board’s preferences – and expected time to publication.) All that publisher competition for submissions based on price (APC) requires is that they care somewhat about cost: that is, for some articles, some of the time, authors choose the lesser priced of roughly equally prestigious journals.

“Thus, the total cost to an institution of this model must include not only library journal subscriptions and grant funding allocated for article processing charges but also some unknown level of funding each author is likely to request from his/her department or take from his/her own discretionary funding.”

I don’t know why so many librarians have an irrational fear that changing the flow of funds will lead to publishers being able to extract even more money from universities…but there is no economic basis for that fear. If switching to a pre-payment (APC) model would enable them to make even more money…why haven’t they gone ahead and done so already? Publishing pre-payment journals does not use up more economic resources (labor, server time, data storage, paper and ink), so there will be no greater production costs publishers need to recover. And pre-payment does not increase publisher market power (in fact, more likely decreases it) so pre-payment doesn’t lead to higher profit extraction either. If the publishing industry can thrive on the funds we currently fork over, then those funds, directed to APCs rather than subscription payments, will continue to suffice.[5]

“There is currently no definitive information about the true costs to publish a journal article. Though article processing charges vary widely, there is some evidence that many would need to be raised considerably to cover the actual costs of publication. Without reliable data, it is impossible to predict the true costs to research institutions of the “flipped” model.”

This repeats an error above. Changing the flow of funds to publishers from post-payment to pre-payment does not increase the cost of publishing journals.[6] If the cost of publishing the journal does not change, then to earn the same profit as they do with subscriptions, publishers need the to obtain the same amount of money from APCs as they currently get from subscriptions. Total revenues do not need to be raised. [7]

“The model would not result in any fundamental changes to the current balance of power in journal publishing.”

Yes! Or almost yes – on this we basically agree, and this is why most of the arguments against pre-payment (APC funding) are flawed: switching from post-payment to pre-payment does not, to first approximation, change the balance of market power. And that is why it won’t lead to higher prices…but it will achieve the long-sought goal of open access. Sounds like a pretty good deal! So why are so many librarians scared of it?

The almost part – as I’ve explained above and elsewhere, pre-payment funding actually is the most hopeful (economically sound) route to decreasing publisher market power (if authors are allowed to make some of the economic decisions – which they don’t today).

So, depending on how APCs are paid by institutions, either we are no worse off economically (but we achieve open access), or, we are better off (publisher power decreases).

“The model would require institutions to spend significant time and resources to coordinate and execute it, both during the transition from the current system to a “flipped” model, then afterward, to administer authors’ article publishing charges on an ongoing basis. These would increase the total costs for the model beyond simply the article processing charges.”

Let me first address the end-game: the post-transition world in which journals have already been flipped. No, there would not be significant time and resources to manage such a system. Every research institution already has a system for managing the flow of transactions related to research activity: the salaries and benefits for research assistants, the travel reimbursements, the computer and lab equipment purchases, etc., etc. The incremental cost of adding APC payment to the existing funds management system is negligible: we don’t need a new system, just to process a single additional transaction per article. Think of the many transactions that are already processed per article of research produced. Put another, way, the processing time for managing one more charge will be a tiny fraction of the cost of that charge itself, and the cost of publishing is estimated to be only about 1% of research expenditures, so at best we’re adding a tiny fraction of 1% of the cost of research. And even that negligible estimate ignores the substantial savings from not having to engage in protracted, costly license negotiations with publishers over subscription packages.

What about the transition? Here, I basically agree: there will be some additional costs during a transition (the funds management costs are still negligible, but there will be other more significant adjustment costs). Most new, improved systems require some up-front investment: if we weren’t willing to sometimes make those investments, library users would still be required to go to the card catalog. One reason to engage in a broad, international initiative to quickly transform scholarly publishing is that a short transition will minimize transition costs.

“SCOAP3 (Sponsoring Consortium for Open Access Publishing in Particle Physics) could be considered as a pilot, or use case, for this model. This partnership of more than three thousand institutions in forty-seven countries started with ten journals in 2014; in its next phase (2017-19), only eight journals will continue to participate.”

Umm, yes, some publishers may decide they prefer post-payment (subscriptions) to pre-payment (APCs). That hardly seems like a reason for research institutions to decide pre-payment is a bad idea – perhaps quite the opposite.

“The model is currently supported by very few organizations in the “global south”; paying article processing charges is difficult in those regions, where institutional budgets are extremely low. Thus, the model would further skew a scholarly publishing system that is already geographically unbalanced.”

The same common flaw underlies this argument: that APCs will cost us more than subscriptions. Overall, producing publications will not cost more, and market power will not increase, so the total revenue paid to publishers will not increase.

There is a question of whether some research institutions will pay more with pre-payment than subscriptions while others pay less. And the answer is probably yes, if prices don’t fall (or increase at a slower rate). (Since prices probably will fall, or at least increase at a slower rate, it is quite possible – even likely – that all institutions will pay less, as the market power of publishers decreases.) But this is almost surely a good thing for the global south. What matters is the relatively intensity of research consumption (subscribing to journals) versus research production (submitting articles to journals). Institutions that produce disproportionately more articles per researcher (of which mine is one) are the ones likely to face a possible increase in total cost. Those institutions that are not are at the high-end of research intensity (e.g., four-year liberal arts colleges, many global south institutions) will likely see a decrease in total cost: they will save more on subscriptions than they pay in APCs. This has been demonstrated in the Pay it Forward project.[8]

We have been working towards an open access world for some 25 years now, with very little progress and many reasons to think that current efforts will not result in near-universal open access. Meanwhile publisher market power has been increasing, and current efforts offer no economic basis for reducing that power and the monopoly profits that many publishers extract from research institutions.

After cutting through the unfounded and economically illogical fears, switching the publishing industry from post-payment to pre-payment funding offers a path to near-universal access without raising prices (at least, not by more than they will increase in the post-payment or subscription model), and a path to reducing publishing market power and thus reducing the total payments they extract from us. Unless a more economically sound, practical approach emerges – and it hasn’t in 25 years – shouldn’t we be working together to figure out how to implement this win-win opportunity?

Footnotes

[1] I write this as someone deeply concerned that we achieve open access, and that we reduce the cost of scholarly communications: I am the university librarian at UC Berkeley. I also write with experience and expertise: I am an economist, and have spent most of my career doing research on markets, competition and incentives. I have published on monopoly, and on the economics of information production and distribution. I have been testifying in federal antitrust lawsuits as an expert witness since 1989.

[5] More than suffice! The leading for-profit journal publishers are earning profit rates of around 40% – that is, monopoly levels – and society publishers are earning enough surplus (the non-profit word for profit) to subsidize their other activities.

[6] Casual use often confuses “cost” with “price”. The cost is the underlying resource cost to produce a good or service: how many hours of labor, how many computers, how much paper and ink. It is what the producer pays to create a product. Price is what the producer charges its buyers to obtain the good or service once produced. The problem is that to buyers, the price is their cost, and so buyers (e.g., librarians) often talk about the “cost” of journals which is fine if all you are discussing is purchasing, but when discussing both the publisher and the buyer side, this creates confusion: do we mean publication “cost” will increase, or journal payment “price”?

[7] I think this fallacy may arise because some conversations are about whether future APCs will look like the current APCs for the few, non-representative journals that use this model. Probably not: it’s not an apples to oranges comparison. But that’s the wrong question if we’re trying to predict the overall cost of scholarly communications to research institutions: what matters is the total payment to publishers, and if the cost of producing the journals doesn’t change, then the total payment doesn’t change unless market power increases – and as I’ve argued above and elsewhere, pre-payment either leaves market power unchanged or decreases it (for publishers).

In July 2016, the Association of Research Libraries (ARL) published an article it requested from David Shulenburger, an economist and senior fellow at the Association of Public and Land-grant Universities (APLU).[1] In this article Dr. Shulenburger argues that flipping scholarly publishing of journal articles from a post-publication, subscription-based business model to a pre-publication, article-processing-charge model would make things worse: that is, lead to higher, not lower payments to publishers (and higher resulting profits for them).

Dr. Shulenberger recommends the right approach to the question — examining supply and demand conditions after a flip. However, he makes a fundamental error in his analysis, and as a result, reaches the wrong conclusion. Following standard economic logic (as he recommends) leads to the opposite conclusion: a flip to an APC-based system would most likely lower the payments to publishers.

The right question to ask: we agree

Let me start with what Dr. Shulenberger got right: the basic economic logic one should apply. He states, correctly, that “in the long run [the prices (APCs) paid] are based in the supply/demand factors of the scholarly communications market.”

But then he applies this principle incorrectly, overlooking the critical factor in the publishing market. He states “individual faculty members have no market power with journal publishers”, and thus concludes that since shifting payment from subscriptions to APCs moves decision making to authors, the result is that the publications suppliers (publishers) will have more relative market power in the APC world, and will thus be able to charge even higher prices than they do today.[2] But he is wrong: authors hold the fundamental power in this market, and the precise problem with the subscription model is that authors are excluded from the market.[3]

Authors have the power

Surprisingly, Dr. Shulenburger starts his article by making precisely this point: “the root of the sellers’ market power has been the granting by authors of all ownership and distribution rights to their work to the journals owned by the sellers.” Publishers are not the original suppliers of scholarly content: they are intermediaries standing between authors and libraries. The authors own the original content. Until the publishers obtain copyright from the authors, publishers have no market power.

Recognizing that authors do have tremendous — one could say ultimate — power in the publishing market, how does this affect the economic analysis of a world flipped to an APC-based pre-payment model for financing publisher activities?

Dr. Shulenburger states that in such a world, the “incidence” of APC cost falls on authors, whether they are reimbursed (by the library or another part of the institution) or not. He’s not quite right about that either, but that’s okay, let’s suppose he is: let’s suppose authors bear the full cost of APCs. Then how does the economic transaction look? Here is where Dr. Shulenburger makes his fundamental error: he says individual authors have no market power to negotiate lower APCs with a journal. But that is not how markets work: the individual author doesn’t need to negotiate APCs with a journal any more than you or I need to negotiate the price of a large flat-screen HDTV with Samsung. If Samsung charges an above-competitive price, we’ll buy from Panasonic or LG or Sony, etc.

Likewise the scholar: if a potential publisher charges a high APC, the author can submit her paper to another journal with a lower APC. With all authors making such decisions every day, publishers will need — in a way never before seen — to start competing with each other on price. And it is precisely that competition that will lead to lower prices in an APC world than in a subscription world.

In short, Dr. Shulenburger is wrong about concluding that authors have little or no power in the market, because he forgets his own fundamental — and incontrovertible — point that the power publishers have comes from authors. And once authors have skin in the game — pay (some or all) of APCs — they will have a reason to start exercising that, not through complicated negotiations, but by simply shopping their article submissions around.

Dr. Shulenburger does know that this point is out there, but he brushes it aside with a common fallacy: that there is one “best” journal for every article submission, and so much hinges on getting one’s article into that “best” journal that authors would never consider submitting to another journal based on APC price.

Malarkey. We scholars (I have been publishing my economics articles in journals since 1988) almost never consider only a single journal as a possible outlet for an article. Depending on its subject, quality, and other considerations, there almost always will be at least two, maybe three or more journals that are in a rough equivalence class as far as prestige and impact on our tenure, promotion and fame. Yes, of course some are more prestigious than others…but there is almost never a single best journal. And we make spending decisions about how to best advance our research based on cost all the time: with our scarce research funds we decide whether to buy the most expensive new lab instrument, or perhaps hire another research assistant; we decide whether to run 10 or 15 subjects through the fMRI machine (which charges us thousands of dollars per hour); we decide which and how many conferences to attend in part based on cost.

And it is not necessary that every scholar choose every journal submission based on APC (and certainly not on APC alone). As long as many submission decisions are affected, in part, by the opportunity to save some research funds (say, to spend on running a few more experiments) if we submit to a lower APC — but comparable quality — journal, publishers will compete. Because without our articles, they have nothing. No power. Nothing.

In an APC world we don’t lose the market / bargaining power of libraries (such as it is)

There is a subsidiary point that Dr. Shulenburger gets wrong to which I alluded above: that only authors will be involved in the economic transaction with publishers, and not libraries (thereby losing the leverage of whatever limited market power we libraries have). There are many different ways that funds to pay APCs could be routed to author research budgets (e.g., direct payments from granting agencies, subsidies from library budgets no longer spent on subscriptions, etc. — a topic for another day). But let’s suppose, as Dr. Shulenburger does, that they may, at least in some institutions, be funded by libraries (who no longer need to pay subscription fees). The library has a finite budget, so it might well establish a maximum APC reimbursement — say, $3000 per article for a certain category of journals — leaving authors to find additional funds if they want to submit to a higher-APC journal. But then the library is back in the negotiation game, and can exert the same power that it exerts in the subscription world: the publishers will want to negotiate with libraries on how high an APC it will reimburse for their journals. Bringing authors into the economic bargain — which is absolutely essential for undercutting publisher market power, since the publisher’s market power comes from the authors — does not need to eliminate the bargaining power of libraries.

Dr. Shulenburger dismisses this argument by saying that authors will demand that libraries (or whomever) pay whatever APC their preferred journal sets, no matter how high, and libraries won’t be able to resist this. Malarkey, again. Authors demand all kinds of additional expenditures by their universities and libraries, and they simply don’t get everything they ask for. Universities don’t pay whatever salary faculty request, nor do they provide whatever research funds faculty request, and they certainly don’t provide libraries with budgets sufficient to buy all of the books and journals that faculty want. So, if a significant share of total payments to publishers (in the form of APC reimbursements) flow through libraries, and the budget is limited (do any university librarians have a “sky is the limit” budget for payments to journals?), then libraries have substantial bargaining power too.

But again, this point is secondary: the far more important flaw Dr. Shulenburger makes is that bringing authors into the market increases the publishers’ relative market power.

Summary

After acknowledging that authors control “the root of the sellers’ market power”, Dr. Shulenburger ignores how this affects the forces of supply and demand that he agrees matter for the outcome in a flipped, APC payment world. Giving authors some of the economic responsibility for deciding to whom to grant their copyrights is exactly the best (and perhaps only realistic) way to reduce publishers’ market power, and will result in lower payments to publishers.

Footnotes:

1. I currently serve as the University Librarian at UC Berkeley. I am also a Professor of Economics, and a Professor of Information (with tenure) at Berkeley. For 29 years (until 2015) I was an economics professor at the University of Michigan.↩

2. Obviously, subscription “prices” and APC “prices” are different things, but I agree with Dr. Shulenburger that the comparison is the relevant one: what we care about is the total payments from universities (and other research institutions) to publishers. “Prices” is just a convenient stand-in for this discussion, and does not change the analysis, for either of us.↩

This week Elsevier and the Social Science Research Network announced that Elsevier purchased SSRN. SSRN is one of the largest open access scholarly services in the world, serving especially the fields of economics, law and accounting.

To forecast what Elsevier might do with SSRN (and the impact on “green” open access as a strategy for reducing the market power and pricing of the monopoly for-profit publishers), we should start with fundamentals (and only forecast in high-level, abstract terms — there are a gazillion specific paths Elsevier might follow over the years, and we don’t accomplish much by speculating about the details).

Elsevier is a shareholder company. That means management has a legal, fiduciary responsibility to maximize shareholder value, which is a synonym for maximizing profits. NOTHING in Elsevier’s mission is to benefit society, or the participants in the scholarly communications world (authors, readers, libraries, etc). To the extent Elsevier (or any for-profit company) does good things for participants, it is solely derivative from its prime objective: profit maximization. (I am not making a moral judgment. This is the social contract in capitalist economies, and indeed, if Elsevier management doesn’t do this, it can be sued by its shareholders, and shareholder lawsuits against managements that don’t maximize shareholder value succeed regularly.)

So, e.g., if Elsevier provides a better product, it might be able to extract more profits, and so we might see better products over time. (But not necessarily, and hence not all participant-desired improvements: the cost of creating the improvements might exceed the additional revenues Elsevier can extract, so the improvement won’t increase profits, and thus Elsevier won’t implement it. This might be because the costs of the improvements are high, but it also might be that the costs are low relative to the value to consumers, but the extra value to participants might be hard to extract — perhaps because competitors can easily imitate the improvement — and then we don’t get improvements that have social value greater than their cost, because they aren’t profitable.) If Elsevier says it intends to operate SSRN in order to benefit users…it’s not telling the truth. (Sorry.) It may believe that it’s use of SSRN to increase profits will benefit users — and it may — but benefitting users is not Elsevier’s goal.

Elsevier has a variety of assets at its disposal. Its leadership has the job to deploy those assets in the way that maximizes profits. Some of those assets are human capital (smart, experienced people), some are its ownership of millions of copyrights on scholarly content, some are its patents and copyrights on its own platform software, etc. And now one of those assets is SSRN. Elsevier gave Mike Jensen a chunk of money because they think that they can use SSRN in a way to increase its own profits by even more than it paid Jensen. SSRN already sells premium subscriptions to libraries and others. Maybe Elsevier thinks it can pump up this revenue stream (raise prices, put more of SSRN value under subscription licensing) — they say this isn’t what they’re going to do, and I tend to believe them on this, not because they are looking out for the authors and readers, but because I don’t think the SSRN pre-print platform has a lot more value that can be extracted through subscriptions.

Instead, I expect that Elsevier expects to leverage SSRN as a key part of the scholarly communications system in some major social science fields (especially economics, law and accounting) to extract value from us in other ways. Perhaps data mining that enables Elsevier to raise its journal prices. Perhaps degrading the quality of service that SSRN provides so that scholars can’t rely on it as much, and Elsevier can raise its journal prices. Perhaps creating greater lock-in to the Elsevier platform so that authors find it harder to switch to competing alternatives for publishing their work than they already do…enabling Elsevier to raise its journal prices.

Etc. One thing the legal and economic fundamentals tell us is clear and simple: Elsevier bought SSRN because it expects to be able to use this asset in a way that will result in higher profits than if it hadn’t purchased SSRN. And because Elsevier has substantial market power — that is, it is not constrained to offer competitive prices — higher profits for Elsevier means more value extracted from authors, readers, libraries, universities, government agencies. We can’t be sure through what mechanism Elsevier expects to increase its profits — at our expense — but we can be sure that this is the sole reason it purchased SSRN, and that Elsevier will integrate and operate SSRN in a manner that best advances its mission to increase its profits.

There is increasing support in the scholarly communications community for “flipping” the standard journal publishing model from subscription-based to “gold” open access, which is to say a system supported by pre-publication fees (article processing charges or APCs), rather than post-publication fees (subscriptions), and in which there is free (unpaid) access to the published articles.[1]

The increasing support is especially strong in Europe, as illustrated by the recent signing of the “Expression of Interest in the Large-scale Implementation of Open Access to Scholarly Journals” which came out of the Berlin 12 Open Access Conference, sponsored by the Max Planck Society. As of this writing, 44 institutions have signed on to the EoI.

A number of my colleagues in US academic research libraries have expressed skepticism or downright opposition. And recently the Advocacy and Policy Committee of the Association of Research Libraries has circulated a one-sided briefing paper in advance of a discussion during the spring ARL business meeting on 27 January. (I say “one-sided” because support of gold OA was presented, tepidly, in just nine words — “the overall aim of this initiative is highly laudable” — followed by nearly a page of single spaced “concerns and criticisms”.)

I think critics of the Expression of Interest are jumping to unfounded and incorrect conclusions, and that organizing opposition to the EoI may greatly hinder a very promising effort to radically transform the scholarly publishing ecosystem much sooner and more effectively than other efforts (notably the “green” OA movement). I’ll offer a few observations here, written from my perspective as an economist. (See Caveat below.[2]) For this article I’m going to assume that open access is a good thing overall.

I first present a summary, followed by a considerably longer statement of my arguments.

Summary

Many decision makers and influencers — particularly in the research library community in the US — are expressing opposition to gold OA for reasons that I think are unsupported by either facts or simple economic principles.

Will gold OA further strengthen the monopoly scholarly publishing firms? No. In fact, it is likely the most realistic path towards reducing or eliminating their market power.

Will there be a change in the current market model? Yes. By engaging authors in the economic decision about where to publish, we will create article-level (submission) price competition between journals and publishers.

Will research-production-intensive institutions be made worse off? No. The costs of scholarly communications (primarily subscriptions) are generally paid (mostly indirectly) by research funders today. Those total payments for scholarly communications will be less in a predominantly gold OA world. The research funders can and will redirect funds to where the costs are paid, raising reimbursements to those institutions whose costs go up (because they are paying for a disproportionate share of APCs) and reducing them to those whose costs go down (because they are saving more through the elimination of subscription payments than they are paying in APCs).

Will gold OA hurt under-resourced institutions (such as those in the “global south”)? No. First, because they generally publish less per employee than better-resourced institutions, at first blush we should if anything expect them to benefit: they’ll save more in eliminated subscription costs than they will pay in APCs. At worst, since research funders routinely adjust research direct and indirect payments as costs change, under-resourced institutions might not get to keep the savings, but they won’t be made worse off. (And any current subsidies to reduce their subscription costs can simply be re-directed to be APC subsidies.)

Will flipping to gold OA take too long and cost too much? Given our experience to date with green OA, and the fundamental problems with getting to effective, universal green OA sufficient to bring subscription prices to competitive levels, flipping to gold OA probably can happen much sooner. And though the transition may be somewhat costly, those costs will be moderated increasingly by negotiated offsets. And some transitional investment is justified by the great social benefits that will follow from open access and competitive rather than monopolistic prices for scholarly communications.

Will flipping to open access strengthen the monopolized scholarly publishing industry?

To address this let me say a few words about the market structure of the current industry. “Monopoly” generally means “a single seller”, yet there are many scholarly publishers (some for profit, some not-for profit; some with many titles, many with just one or a few titles). Nonetheless, it is reasonable, for short hand, to say that scholarly publishing is monopolized.

First, research output (e.g., articles) is what we economists call a differentiated good: one article is not a perfect — or often even good — substitute for another. If articles were perfect substitutes, then if one among several publishers, if one tried to charge an above-competitive article price (to first order, the average cost of reviewing, editing, reproducing and distributing it), readers would switch to a different provider who competed by offering a lower price, with the competition maintaining low, competitive prices — as we see for corn flakes, for example. But since articles are (often quite) imperfect substitutes, when one publisher charges above-competitive prices, readers don’t simply switch to a different article from a competing publisher. There will be some limit to how much readers (or their agents, such as libraries) will pay, but it will be well above the low incremental cost of an article.

Thus, articles that people want to read have scarcity value — you can only get them from one publisher, generally (this is why publishers care so much about obtaining and protecting copyrights). Whoever has copyright on an article that readers want to read can charge a scarcity rent (price > cost).

The market for publishing has evolved so that a small number of organizations control copyright on the most valuable articles (e.g., Elsevier, Springer, Wiley, Taylor & Francis, the American Chemical Society). They are able to charge prices well above incremental and average cost, so they are are earning above-competitive profit margins. In recent years the profit margins of the largest for-profit scholarly publishers have been around 35% or higher; a competitive, risk-adjusted profit margin is probably closer to about 10%. (See Caveat below.[2]) So, on the order of 25% of what we’re paying is not for the cost of publishing value added, but for excess (above-competitive, or monopolistic) profit.

Back to “flipping”. People concerned about the Expression of Interest or other discussions of “gold” OA almost always assert that we will simply be reinforcing, even strengthening the publishing monopoly.

I am unaware of any cogent economic argument that leads to this conclusion.

To strengthen the existing monopolists, something about the APC (article processing charge) model for paying the costs of publishing (instead of subscription) charges would need to raise the barriers to competition: that is, to give the existing firms increased market power. I don’t see anything about gold OA that does this. It may leave market power unchanged (I don’t think so; see below).

But I don’t see any way in which it increases market power. The primary sources of market power for the large monopoly publishers are three:

They have journals that have a reputation for prestige, and so authors want to submit their articles to be published in those journals, rather than in journals published by less monopolistic organizations.

They have many such journals, which they can sell in “big deal” bundles that make it very difficult for purchasers (mostly libraries) to put competitive pressure on the publishers by dropping subscriptions to their weaker journals (that is, those for which there are reasonably good substitutes).

(This is a big one, and will come back below.) The decision to commit resources to purchase a journal is for the most part made by someone different (usually a librarian) than the decision about where to submit an article for publication (made by the author). Even if authors realize in the abstract that by submitting to publishers that charge monopoly prices they are reinforcing the power those publishers have, which results in their university or research lab having to spend too much on subscriptions, we have a classic collective action problem: the decision of each individual author about where to publish does not directly affect the amount the author’s institution spends on subscriptions, but does affect his or her readership and prestige, so authors (for the most part) quite rationally ignore the monopoly power of the publishers to whom they submit.

Changing to a funding model in which (monopolistic) publishers get paid in the form of pre-publication APCs rather than post-publication subscription payments does not change the first two sources of market power in any way I can see. It may change the third source of market power, but in a way that weakens, not strengthens the monopolies. (I’ll discuss this below).

So why do librarians (and others) fear that flipping to gold OA will increase the power of the monopoly publishers? The only reason that might make sense is that they think there is an alternative path in the future — neither the current market structure, nor gold OA — that will be more competitive than either, and thus that committing to gold OA means we lose the opportunity for something better.

What might that better world be? The only model that I see actively discussed is “green OA”: a model in which the current publishing model continues, but in parallel authors submit the article to an open access repository (typically with an embargo period). Funding agencies in the US have been driving towards this model, with NIH being the most aggressive to date. As a result, most recently published biomedical articles are now made available through PubMed Central, though typically with a six to twelve month lag.

Is the green OA model going to reduce market power (more than gold OA might, see below)? I haven’t seen any research evidence to date suggesting that it has yet (green advocate Stevan Harnad agrees, “no evidence yet of … subscription cancellations … even in fields where it has already attained 100% Green OA for more than two decades”). The pressure on publisher prices would be this: if enough readers were willing to wait the six to twelve embargo months for access, enough subscribers might start cancelling their subscriptions, inducing publishers to lower prices. We’d expect to see this first and strongest among publishers of biomedical journals, since the most successful green OA effort to date is PubMed Central. I haven’t seen a slow-down in the above-inflationary rate of price increase in biomedical journals (much less a decrease in prices, towards competitive levels; see Caveat below[2]).

There are serious limitations on the green OA model, and its ability to create this hypothetical pressure on publishers to lower prices.

It needs to be adopted aggressively by government funding agencies in most or all major research producing countries, if enough content is to be available in green OA to create enough subscription-cancellation risk to force publishers to lower prices.

Author deposit compliance must be high, again, for enough content to be available. Experience to date is that voluntary author submission to OA repositories is very low, and that stands to reason: it’s an extra work-flow for them, on top of the already time-consuming and irritating journal submission process. The exception to low compliance rates is in biomedical, with the difference being that NIH (alone among US funding agencies, I believe) enforces deposit by holding up subsequent funding if an author has not deposited previously-funded research outputs into PubMed Central. But…

Even if all funding agencies (in all research-producing countries) implemented an NIH-like policy with enforcement, much scholarly output is not directly tied to extramural funding. The very strong and specific dependence of identifiable biomedical projects on specific grants makes this model work in that set of disciplines. It would be very difficult to use this compliance enforcement mechanism in many other fields where the link between grant and article is much less clear. Even more so because many scholars in social sciences and humanities (in particular) are not continuously funded, so threatening to withhold the next grant may not have much effect. Indeed, much research receives no extramural funding at all.

I’m not against green OA where it is reasonably efficient. But I think we’ve been trying it long enough now that we can see plenty of (informal) evidence that it is not going to be effective for much scholarly research.[2] And I don’t see any evidence yet that it will reduce publisher market power enough to lower prices even where it is effective.

How might gold OA reduce market power?

Gold OA doesn’t increase the power of the dominant publishers: they are already extracting profit-maximizing monopoly revenues from us, and switching to gold won’t increase the amount they extract. And articles will be available open access to everyone. So we’ll be better off than we are today in the subscription world.

But I think it is likely to be better still, given some time for participants in the market to adjust. Leap ahead some years and imagine the world in which most significant journals are published gold OA, with article pre-payments and no subscription charges. And imagine that authors are at least somewhat involved in the financial decision of where to submit their articles: that is, the submission decision has an economic effect on their research budgets. While authors will still have a strong incentive to publish in high-prestige, widely-read journals, rarely is there only a single good journal suitable for a given article. In this world, authors will have an incentive to also consider the article fee price for submitting to various good journals, and will start to exert competitive pressure on publishers to lower those prices. And it is exactly that competition which has the best — indeed, I think probably the only — chance of leading us to a new market equilibrium in which the amount we spend on scholarly publishing is reduced to the resource cost — that is, the amount it takes to actually provide the peer review management, administrative, copy-editing and marketing services that publishers provide. The obscenely high monopoly profit margins will be whittled down as journals compete to attract submissions of the best articles from the best scholars.

There are some simple and lovely reasons why competition would work in a gold OA world when it doesn’t in a subscription world. The most important is that the person deciding where to submit an article will have some reason to care about the price the publisher is charging. The second is that the first two huge market power advantages I enumerated above are both deflated when journals aren’t sold by subscription. When subscription purchasing decisions are made at the level of the journal (bundle of articles) — and increasingly the “big deal” (bundle of journals) — the only possibility for competition is between journals or bundles of journals, and as I pointed out, different articles published in different journals are not very good substitutes for each other. But in a gold OA world there is competition at the level of the article submission, and before the article is accepted for publication, multiple journals can be very good substitutes for each other (for example, an economist generally gets as much readership and prestige whether her article is published in the American Economic Review, the Journal of Political Economy, or the Quarterly Journal of Economics).

This is the key: in a gold OA world with authors bearing part of the article fee, journals and publishers compete on price, not just quality.

Authors pay? How will they afford this?

Much of the concern about gold OA seems to be about authors who are not funded by research grants to pay article fees. This is “merely” a problem of the distribution of scholarly communication funds. We — society — are paying $X billions currently to sustain the scholarly communications enterprise. Gold OA doesn’t increase the resource cost of commnications: it doesn’t require that we employ more people or more servers or more kWhs of electricity. It shifts the payments from post-publication to pre-publication, but as I argued above, gold OA doesn’t increase market power, and in fact is likely the best path to decreasing market power, and so the total amount paid to publishers should, if anything, fall. So, the problem is “merely” one of getting the money from subscription budgets into APC budgets. (I keep scare quoting “merely” because I am aware that changing administrative flows of funds will take some time, but it’s an administrative problem and can be resolved — the path through which various activities often changes.)

Right now most of the money flowing to publishers is paid by research libraries, who receive their funds from their central campus budgets. For the most part, central campuses (at least in the US) receive these funds through overhead or indirect cost payments by external research funders. This flow of funds suggests one straightforward way in which funds could be re-directed in a gold OA world (there are others). First, central campuses could reduce the budgets of libraries by the amount that we save by not having to pay for journal subscriptions. Then, the central campus could provide authors with research funds to offset that part of their APCs that are not covered by research grants.[3]

I did say that to get the benefits of article submission competition we need authors to bear a meaningful share of the cost. If campuses simply reimburse them for APCs, no matter how high they are, then authors don’t have an incentive to force publishers to compete on price. So, to get competition, campuses might offer only a fixed reimbursement, equal say to a reasonable estimate of the current resource cost (not price) of publishing an article — today around, say, $2000 — and if the author wants to publish in a journal with an above-competitive (monopolistic) APC she will have to come up with additional funds herself. (An elegant alternative that may seem less harsh to authors, suggested to me by Mark McCabe via his collaborator Mackenzie Smith, is to give authors a somewhat higher amount — say, average cost plus $1000 — per article, and let the author bank the difference between that amount and the APC in a research account.)

Is gold OA bad for research-production-intensive institutions?

Some are concerned that if the costs of scholarly communications are paid through pre-publication fees those institutions that produce relatively more publishable research will be disadvantaged because they will pay more in APCs than they will save in subscriptions. It’s almost surely true that there will be some redistribution of where the funds are flowing. However, again, this is “merely” an administrative flow of funds issue and with some time our research support systems can adjust. Most of the funds supporting the costs of scholarly communications (currently mostly subscription charges) are, ultimately, coming from government funding agencies (through indirect cost payments). As the subscription expenditures of institutions that consume (subscribe) relatively more than they produce (publish) fall, indirect cost reimbursements to those institutions will (and should) decline correspondingly. And as the publication costs of institutions that produce relatively more increase, indirect cost payments (or direct cost APC payments through grants) will (and should) increase. As long as the scholarly communications industry doesn’t cost more to support (and when competition heats up in a mostly gold OA world, we will be spending less), it’s just a matter of adjusting the routing of research cost reimbursements across institutions, which is something funding agencies already address continuously.

(I am not advocating that “the rich get richer” — if publication costs go up and they are reimbursed through direct or indirect funding agency payments, institutions aren’t getting richer, they are just being held harmless. I’m not suggesting the Harvards of the world should make a profit by being given more government reimbursement than they need to pay publishing costs!)

Is gold OA bad for under-resourced institutions (e.g., those in the “global south”)?

A variant on the argument that gold OA is bad because authors can’t afford to pay APCs is that it is bad because poor institutions can’t afford to pay APCs. But the point I just made about research-producing institutions demonstrates that generally just the opposite should be true. Under-resourced institutions generally are below average in their ratio of research published to subscriptions obtained. That is, the savings to them on subscription payments should be larger than the APCs they have to pay. (If cost reimbursements are adjusted as I predict, they may not get to keep these savings, but they won’t be made worse off.)

I imagine some will argue that poor institutions, say, in the “global south”, can’t afford either subscriptions or APCs, and should get both for free. OK, that’s a fine policy recommendation, but it doesn’t change the fact that the amount of subsidy they need will be less in a pre-publication payment world (gold OA) than in a post-publication payment world (subscriptions). If publishers, or wealthier nations want to offer subscription subsidies, those subsidies could be provided to cover (the lower total amount of) APCs instead.

Will the transition to gold OA be slow and costly?

Slow? Maybe, though if most research institutions come together behind the Max Planck Society’s Expression of Interest and collaborate to negotiate with the dominant publishers, the tipping point may be near. I don’t see it as any slower than the progress of green OA has been: in fact, since gold OA requires implementation by a modest number of professional organizations (publishers), whereas universal green OA requires implementation by more or less every individual author, I think transition to universal gold is much more feasible than to universal green.

Costly? Maybe. Opponents quickly assert we’ll be paying double while the transition is occurring: paying for all of our subscriptions while publishers still require subscriptions to journals, but also paying APCs for the articles that are published by these journals on an OA basis. This fear is primarily about the so-called “hybrid” path to gold OA: that subscription journals accept and publish a subset of articles OA when the author pays an APC, but that the rest of the content in the journal is only available by subscription. (The journal-by-journal “flip” model has entire journals switching to accept only APC-paid OA articles, and thus eliminating their subscription fees.)

Some advocates for gold OA argue that libraries — especially consortia — will be able to negotiate “offsets”, that is, reducations in subscription payments to offset the amount of revenue the publishers collect in APCs. There has been some progress in this regard, for example in the UK, Austria, and the Netherlands.

I suspect that offsets will only partially cover the costs of transition to a gold OA world. Even where progress is being made, offset savings are lagging behind growing APC payments. And my economic arguments above suggest why offsets are unlikely to fully finance the costs of transition: the dominant publishers have substantial market power, and they are going to use that power to resist the transition to gold OA, trying to make sure we (research-producing institutions) find the transition to be costly.

However, it’s important to recognize that however costly the transition is (and as the consortia demanding gold OA increase in size and experience, offsets will become increasingly helpful), these are transition costs. If the resulting outcomes — open access to scholarly research, and lower prices due to competition — are good for society, then we should be willing to invest something in the transition to get there.

Footnotes:

This article is based on a talk I gave at a recent ACRL Workshop on Scholarly Communications, hosted at UC Berkeley on 15 April 2016.

1. Most of the discussion these days focuses on journals and articles, not monographs. I’m going to write using that terminology. But generally everything I say below applies equally to the economics of monograph publishing, as well.↩

2. Caveat. This is a thought piece. I haven’t had the opportunity yet to do more than casual empirical analysis to back up the empirical claims. So I mention “caveat” above in a few key places where I am making empirical claims that I believe, but which I realize could turn out to be incorrect. I’ve been following these issues long enough to be reasonably certain that there is not compelling empirical evidence to refute my claims, however.↩

3. Yes, I am a university librarian saying that library budgets should be cut if we no longer have to pay subscription fees for scholarly journals. Our goal as a campus library is not to maximize our budget, but to support the research and education mission of the university, and I think both will be better off if we move from libraries paying for subscriptions to authors paying for article processing charges.↩